Hedge funds swing a big stick. There are more hedge funds than there are stocks traded. Because the SEC has done nothing for so long, they have allowed the short side to grow into a gorilla, way out of control. Not only is it a local problem in the US, but foreign countries are undermining our financial institutions as well.
There was nothing about today that set up this sell off except some hedge funds getting together and deciding that today would be a great day to set up a sell-off. With so many hedge funds and day traders, once the ball gets rolling, that's all she wrote. Fundamentals done mean squat anymore.
People that buy stock are supplying the liquidity to fuel the economy. That's basically how it works. Short selling dries up that liquidity. When naked short selling occurs, its basically theft, because that liquidity leaves and is unaccounted for. It's stolen. Why our government allows the SEC to continue to sit on its ass and do nothing while this has been occurring for over 10 years is amazing. I realize that Obama wants to concentrate on Main Street, but unless he focuses on restoring some faith on Wall Street, it's going to be a very uphill battle.
Maybe I'm simplistic but I don't buy a stock because there are a lot of shorts. I buy a stock because I think it will make money and grow. Sometimes I will buy a stock because it is so cheap that I can't afford not to. CITI was in that situation at $2. C is not making money right now. They are losing money and may need another infusion of TARP cash. I am not suggesting that CITI will go under. I seriously doubt that Geither would allow that but PLEASE explain to me how they are making actual cash! As soon as I see that and think it is sustainable I will definitely jump back aboard. Until then I wait and keep my powder dry.
If you had studied Greenspan, the cycle of boom & bust is setup by the FED. They have written about it. Stocks cannot continue to go straight up, nor straight down. Quit trying to find an easy scapegoat and think a little deeper.
The game is rigged by those that write the rules. I have learned how to play the game and have made more $$$ in the last 2 years than in the previous 15 years of trading! I am slowly taking my ball and moving away from this crooked market place! Either join them (learn how to play the game) or lose your "investment(s)" - simple as that!
In B*itch Shapiro we trust. My ass, one of the blunders of the Obama administration. While shorts are devouring the financial system and banks, Ms Shapiro is drinking her coolaid and thinking about the 'appropriate' way to curb bear raids, short selling, and naked shorting. She came up with 10 ideas so far, and she would like to come up with 20 more that she can discuss with the industry 'experts'. Delay, delay, delay and give shorts the time and opportunity to reek more havoc - that has been her plan from day one.